LINCOLN — State officials made a “critical error” by privatizing Nebraska's child welfare services without doing a cost-benefit analysis, according to a report released Friday.
The Legislature's Performance Audit Committee concluded that such an analysis could have provided a more realistic sense of the likely cost of the effort.
In turn, it might have prevented the turmoil, loss of services and cost overruns that have occurred in child welfare during the past two years.
State Sen. John Harms of Scottsbluff, the committee chairman, said state officials did not stop to examine their plans even after being warned they wouldn't work.
“Whoever was pushing the button wanted this to get moving and get taken care of,” Harms said. “That's the tragedy we now have. If they'd slowed down, we might not be where we are today.”
Harms released the audit committee report Friday to the Health and Human Services Committee.
The audit was done as part of a legislative investigation into the child welfare privatization effort.
A final report on the investigation is expected Dec. 15.
Sen. Kathy Campbell of Lincoln, who is leading the investigation, said the new report is consistent with other reports and testimony the HHS committee has collected.
She said it underscores the need for lawmakers to get involved with the broader issue of child welfare reform, not just privatization.
The audit committee faulted Nebraska Department of Health and Human Services officials for several significant failings.
One was the failure to do a cost-benefit or similar analysis.
Another was the failure to set clear goals and timetables for the effort, which the report called “contrary to best practice” and the result of “questionable professional judgment.”
In addition, the effort has shown little progress on addressing the two issues that were given as reasons for making the changes: reducing the numbers of Nebraska children removed from their families and improving Nebraska's performance on federal child welfare standards.
However, the committee concluded HHS had acted within its authority and followed state law when issuing the contracts.
It also concluded that, except for the cost-benefit analysis, the agency has generally followed government standards for overseeing contracts.
HHS is working now to set more specific goals and timelines for privatization, said Kerry Winterer, CEO. He said he didn't want to second-guess why such goals were not set earlier.
Winterer was appointed CEO in June 2009, when the contracting process was under way.
He did say there was “some truth” in the committee's concerns about the lack of analysis before the contracting began.
Comments from HHS that were included in the audit committee report generally showed that the agency agreed with the committee's findings.
Harms said the concerns raised in the report come down to “the need for transparency, accountability and leadership” within HHS.
To address the leadership concerns, the committee recommended a review of the top people within the children and family services division of HHS.
The committee also called for a review of the agency's structure. HHS was created by merging five former state agencies.
“The agency itself may be too big for adequate internal oversight,” Harms said.
In addition, the committee called for legislation requiring a written cost-benefit analysis for any services contract worth $25 million or more and recommended that lawmakers tackle policy issues related to safely reducing the number of children in out-of-home care.
Starting in November 2009, Nebraska contracted with five private agencies to provide services for children and families in the child welfare and juvenile justice systems.
Since then, three of the five agencies have lost or dropped their contracts, citing financial and management issues.
The two remaining contractors are Kansas-based KVC, which handles all cases in southeast Nebraska and one-third of those in the Omaha area, and the Omaha-based Nebraska Families Collaborative, which handles the rest of the Omaha-area cases.
State workers resumed full responsibility for child welfare cases in the western, central and northern areas of the state when the former private agency lost its contract.
The committee recommended legislation barring the state from again extending privatization into the western, central and northern areas of the state.
Winterer said HHS has no intention of contracting in those areas “anytime soon.”
“The jury's still out” on whether privatization can work in the more rural areas of the state, he said.
Contact the writer: 402-473-9583, martha.stoddard@owh.com
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